3 Rules for Family Business Success

3 Rules for Family Business Success
Family Business

Every successful family business has mastered three main principles.

These 3 main principles are:

Communication, Accountability and Planning

1. Communication

Communication breakdowns are the biggest cause of family business problems.

It’s important to proactively deal with both simple and complex problems within the family business.

Clear, open and consistent communication between family members is critical to maintaining harmony in a family business.

To Improve Communication in your family business you should:

Hold Regular Family Meetings

Both formal family councils and meetings and informal channels like family retreats, dinners, and vacations can ensure family members feel “in the loop.”

Family meetings will include focused agendas—and perhaps a neutral facilitator.

While informal communication may include business and non-business topics.

Provide Regular Education

Never assume all family members have the requisite skills in effective communication, conflict resolution, listening, negotiation, assertiveness and other areas that are crucial to business success.

Provide ongoing training to ensure everyone has the knowledge and skills necessary to add value to the business and do their jobs well.

2. Accountability

Determine and Follow a Business Philosophy

Family businesses need to strike a balance between the happiness of family members and what’s best for business.

What's best for a family member working in the family business is not always in alignment with what is best for the family business.

This is a fact.

So family business leaders need to set out a clear and transparent philosophy how conflicts between family interests and business interests will be resolved.

Create a Family Business Mission Statement

Creating a Family Business Mission Statement will give everyone input into what the purpose of the family business is.

When there is alignment between family members in regard to the purpose of the business, there is less likely to be conflict between competing interests.

3. Planning

Create Governance Rules

There will be fewer opportunities for conflict if roles and responsibilities are defined and business “rules” such as entrance requirements, paths to promotion, and salary schedules are clearly spelled out.

Governance rules provide documentation and promote a sense of fairness, which is especially important to both family employees and non-family staff.

Address Succession Planning

Business owners must understand the power lies with them to make inheritance decisions.

Succession plans should be solidified long before exiting the business, and they should involve answering questions like: Who will run the business? How will ownership be divided? Who will make decisions? Will siblings be co-leaders or will one have more authority than the other(s)?

Succession planning in a family business can be one of the most unifying and strengthening actions a business owner can take.

Conversely, if succession planning is avoided in a family business, or done poorly, division and a breakdown in family relationships is common.

Closing Thoughts

Succeeding in family business is both possible and probable when these 3 rules for family business success are followed.

About the Author:

Chris Hall is a Family Business Advisor who specializes in family business succession planning and conflict resolution in family business.

To learn more, log on to: abbusinessbuilders.ca

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